This is the essence of Ripp’s strategy: Once again master of its cash flow, Time Inc. has the chance to become an innovator again. “Time Inc. sent all of its cash to Time Warner, and Time Warner reinvested that in other places,” Ripp said. “Our team has invested more in Time Inc. in the first nine months of this year than Time Warner did in 10 [years].”
The company has been aggressively cutting costs as well.
In the 18 months since the spinoff, and the two years since he began his tenure, Ripp has been moving quickly to launch new businesses and expand old ones. At the same time, he has laid off around 500 employees, made heads roll inside the executive suite and outsourced the IT department to India–a move popular with analysts but a source of continual frustration for staffers.
He has also begun, through his deputies, a radical remaking of how the company produces its products. The magazines have lost editors, and the remaining ones work on both print and online editions. Meanwhile, the websites are ramping up production with the goal of going from 150 to 200 posts a week to 1,000, according to an insider familiar with the strategy. Between the cuts and the speeded-up production, veterans say, the emphasis now is on quantity over quality–a charge Ripp denies. “We’re always going to maintain the quality of our publications,” he said.
But given print advertising’s ongoing decline and the challenge of building digital businesses, he sees no choice but to do more with less, whether employees like it or not. “Cutting costs is like peeling an onion,” Ripp said. “Every layer you go down, you seem like you can’t get to the next layer because there’s too much crying along the way. But when you get there, you can make it.”
By the end of the year the company will have left its iconic headquarters in the eponymous Time & Life Building for 700,000 square feet in Lower Manhattan. The company is shifting to a digital first strategy for its brands with more, shorter content. It has acquired digital properties such as xoJane. What would company founder Henry Luce think of all these changes?
“Who cares. Henry Luce is dead.”
The company trades at a reasonable valuation, with $440-490 million in projected OIBDA in 2015, against a market cap of just $2.14 billion. The company also yields over 4%. Last week, the firm sold its UK headquarters building for over $600 million. When earnings are released later today, the company may detail how it will use the proceeds, perhaps to pay down some of the debt it was burdened with by Time Warner.
Disclosure: The author holds no position in any stock mentioned